L.E. Memo | Intolerably Boring

Moving Beyond Buffett and the Search for New Investment Thought

This weekend saw the release of the annual Berkshire Hathaway Annual Report and Chairman’s Letter. With it were the usual shows of piety and equally rehashed criticisms. There was also, however, a new, palatable sense that while Buffett’s strictures were no less relevant, investors are finding them less nourishing. I do not believe this feeling is unique to Buffett acolytes. Despite a proliferation of financial content in the form of newsletters, substacks, and podcasts, there has not been any uniquely new, or refreshingly bold, thought on the inherent problem of investing. Even this publication which seeks to be “a public journal of my notes on the best investment writing I find from the past and today” is significantly weighted to the past relative to today.

Graham, Dodd, Buffett, Munger, Marks, Greenblatt, Klarman, et al. are a generation (or two) removed from the people actually doing the bulk of investing today. Perhaps it is anathema to value investors to even believe there should be pioneering ideas around investing. It could be that there simply isn’t much more philosophically to add to the canon. Even with the benefit of experience and various academic breakthroughs, valuing companies and constructing portfolios remains in an elusive chasm between art and science.

It is also conceivable that the Money Game has simply gotten too disambiguated to be talked about practically. The proliferation of highly quantitative strategies and the academic obsession with pounding markets into the laws of nature have made more subjective inquiry seem quaint bordering on naive. Still, markets interact with society and political economy and their diversion from the economics of everyday life tends to converge violently and frequently enough to warrant discussion.

It seems unlikely that in the face of accelerating technological, social, and political change that investing or even the role of finance in society should not warrant new degrees of enlightenment. Of course, there are talented writers that are synthesizing the present and making sense of financial developments, but few seem to be focused on expelling dated notions or building new frameworks. Dialogs about investing are caught in a loop between ex-ante theorizing and ex-post quarterbacking.

To have a substantive discussion you must abstract to a hypothetical level better left to academia. If I ask, “Would you invest 100% of your capital in a risk-free investment that provided 8% per year?” we can address a number of considerations dispassionately, but when I ask a similar question about a security in the market, the conversation succumbs to the weight of the million logical fallacies and biases that befall investors every day. Perhaps this is why Buffett and the other practitioner-philosophers of investing are so fond of talking in parables and aphorisms. After six decades of Berkshire letters, still, only a precious few have any idea how investment decisions at the company are actually made.

Macro palm-reading, repackaged sell-side reports, and “Bear Porn” dominate the self-published landscape. While professional writers typically produce a higher quality product, they too are bound by the business model of hyper-timeliness and reductive brevity¹. As Keynes famously wrote, the work of investing is “intolerably boring and over-exacting,” so it is no surprise that the market for exploring it with any depth is limited.

Buffett has enviably attracted not just a long-term investor base but an audience that eagerly awaits 5,000-word tomes about “buying companies, not stocks.” He has also spawned a generation of money managers and commentators that aim to talk like Buffett but almost always end up repeating him. When Issac Newton spoke of standing on the shoulders of giants, surely he didn’t literally mean just to enjoy the view.

1. Some exceptions might be the criminally underappreciated Footnotes Analyst, which breaks down the crucial details and analytical impact of financial reporting standards; or Verdad Capital’s weekly research which could be described as approachably quantitative and academic. Of course writers like Adam Tooze, Matt Levine and more are adding to the body of knowledge around finance and economics, but the philosophical soul of most investing remains anchored in the past.